Release Date: April 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fourlis Holdings SA (FRA:2FH, Financial) reported strong retail performance, gaining market share despite a challenging environment.
- The company exceeded its profit guidance, with significant profit improvements and enhanced shareholder returns through higher dividends and share buybacks.
- IKEA's expansion continued with the opening of a new store in Patras and plans for more urban IKEA stores in the coming years.
- The sportswear segment saw a milestone year with a partnership with Foot Locker, expanding its geographical footprint and product offerings.
- The logistics arm signed an important agreement with Inter IKEA to build and operate a logistics center for the Eastern Mediterranean, enhancing operational efficiencies.
Negative Points
- A cybersecurity attack in late November disrupted digital systems, impacting sales by an estimated $15 million, particularly affecting the home furniture segment.
- Despite overall revenue growth, IKEA's revenues declined by 5% in 2024, partly due to the cybersecurity incident.
- Operating expenses grew faster than sales in some segments, although they were managed below gross margin growth.
- The company faced challenges in the home furnishings market, which saw a 9% decline in Greece due to inflationary pressures on households.
- The share price underperformed compared to other stocks on the Athens Stock Exchange, raising concerns about valuation and shareholder returns.
Q & A Highlights
Q: Could you provide an outlook for IKEA's performance in 2025, considering the current market conditions?
A: Dimitrios Valachis, CEO, stated that despite a challenging market, IKEA has seen a 4% increase in volume, gaining market share. This trend is expected to continue with single-digit growth in the first quarter of 2025. Specific targets for 2025 will be shared after the first quarter results, but the company remains confident in achieving its medium-term targets.
Q: Are the high gross margins achieved in 2024 sustainable, and how do you plan to manage operating expenses?
A: Dimitrios Valachis, CEO, explained that the gross margins are sustainable as they are based on improved supplier prices and optimized inventory management. Operating expenses will grow below profitability growth, despite inflationary pressures, due to process optimizations.
Q: Can you elaborate on the strategy behind the stock grants and stock options given to management?
A: Vassilis Fourlis, Executive Chairman, clarified that the stock grants and options were approved by the General Assembly to reward top management for their performance during the Greek crisis and to provide future incentives. This decision was deemed appropriate to retain and motivate key personnel.
Q: How is the company balancing investments in new stores versus shareholder remuneration?
A: Vassilis Fourlis, Executive Chairman, stated that the company aims for a balanced approach between investing in new stores and shareholder remuneration. The board plans to propose a new buyback program while continuing to invest in growth opportunities like new Foot Locker stores.
Q: What impact did the cybersecurity incident have on IKEA's Q4 2024 performance, and how is Q1 2025 shaping up?
A: Dimitrios Valachis, CEO, noted that the incident negatively impacted Q4 2024 sales, but IKEA is recovering with high single-digit growth in March and double-digit growth in April 2025. The incident's effects were largely contained to December 2024 and January 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
